Genuine Parts Company (GPC) posted a 16% rise in profit to $146.3 million or 93 cents per share in the first quarter of 2012 from $126.5 million or 80 cents in the same quarter of last year. With this, the auto parts maker outdid the Zacks Consensus Estimate by 7 cents per share.
Sales in the quarter grew 7% to $3.2 billion, which was in line with the Zacks Consensus Estimate. The improvement was attributable to strong sales in mainly Automotive and Industrial segments. Operating profit rose 5% to $690.9 million in the quarter from $656.8 million a year ago, driven by higher gross profits.
Sales in the Automotive segment grew 6% to $1.5 billion driven by the positive impact from sales initiatives and improving fundamentals in the automotive industry. Sales in the Motion Industries or Industrial segment scaled up 12% to $1.1 billion, making it the best performing segment, driven by internal strategies and a recovery in the economy.
Sales in the EIS or Electrical segment inched up 5% to $147.1 million with the recovery of the manufacturing sector of the economy. However, sales in the S. P. Richards or Office Products segment declined 1.5% to $426.2 million due to challenging environment in the office products industry.
Genuine Parts had cash and cash equivalents of $424.4 million as of March 31, 2012, down from $465.9 million as of March 31, 2011. Long-term debt remained unchanged at $500 million as of March 31, 2012 compared with the year-ago level.
In the quarter, the company’s net cash flow from operations improved significantly to $172.3 million from $53.4 million in the prior-year, due to an improvement in profit and favorable changes in operating assets and liabilities. Meanwhile, capital expenditures increased to $16.9 million from $14.5 million in the first quarter of 2011.
Genuine Parts has undertaken various initiatives to boost sales and earnings, such as product line expansion, penetration into new markets and cost-saving activities. The company relies on a diverse product portfolio for top-line and bottom-line growth. Its major competitors include Advance Auto Parts (AAP), AutoZone (AZO) and W.W. Grainger (GWW).
Currently, the company retains a Zacks #2 Rank on its stock, which translates to a Buy rating for the short term (1–3 months).
Read the Full Research Report on GPCRead the Full Research Report on AAP
Read the Full Research Report on GWW
Read the Full Research Report on AZO
More From Zacks.com
